Tortilla-Maker Gruma Climbs to 16-Year High in Mexico

Danielle Verbrigghe

January 18, 2013, 5:53 PM EST

Gruma SAB, the world’s largest tortilla maker, rose to a 16-year high on speculation that the company might cancel repurchased shares in a sign of confidence in growing demand for the flat round cakes of corn and flour.

The San Pedro Garza Garcia-based company’s shares advanced 2.5 percent to 43.88 pesos at the close of trading in Mexico City, the highest price since January 1997. The stock rose 48 percent in in 2012.

Gruma last month agreed to spend as much as $510 million to buy out a 23 percent stake held by Decatur, Illinois-based corn processor Archer-Daniels-Midland Co. Some investors may now be betting that the company will cancel the repurchased shares, said Miguel Mayorga, an analyst at the Mexico City-based brokerage GBM SAB. That could be a signal the company won’t need new equity financing anytime soon.

Canceling repurchased shares would show “confidence and commitment,” said Mayorga, who rates the stock the equivalent of buy. The company has “strong fundamentals behind a growing tortilla market in the U.S. and across Mexico.”